Saudi’s PIF signs 5 agreements in push to establish MENA voluntary carbon market

Saudi’s PIF signs 5 agreements in push to establish MENA voluntary carbon market

Saudi Arabia’s Public Investment Fund (PIF) has announced five leading Saudi businesses have signed memoranda of understanding to become its first potential partners of the Middle East and North Africa regional Voluntary Carbon Market (VCM), the wealth fund said in a statement released late Tuesday.

Saudi Aramco, SAUDIA airlines, ACWA Power, mining and metals company Ma’aden, and ENOWA (a subsidiary of NEOM) were the five companies that signed agreements with PIF.

The VCM aims to connect the supply of carbon credits with demand from investors and institutions wanting to reduce their carbon footprint by offsetting the emissions they generate.

Carbon credits are a mechanism used to reduce greenhouse gas or carbon emissions. They act as a permit to enable the owner of the credit to emit a certain amount of emissions. One credit allows the emission of one ton of carbon dioxide or the equivalent in other greenhouse gases.

The carbon credit works as a “cap-and-trade” model – a common term for a government regulatory program designed to cap or limit the total level of emissions – so when companies pollute, they are given credits, it allows them to continue polluting but only up to a certain limit. That limit is then reduced periodically